Hidden Transit: How Companies are Going the Last Mile

Luxury coaches traveling the streets of Seattle and San Francisco each day. Shuttle service that allows a nondriving grandmother to spend her day shopping with friends. Shuttles lined up at Washington, D.C.’s Foggy Bottom Metro station waiting to carry workers into Georgetown, a neighborhood infamous for its lack of a subway stop.

They are all part of a mostly unheralded phenomenon: employers and building owners/managers taking responsibility for providing transit service to their employees, tenants, or customers. The data providers who track transit service often do not recognize that these privately provided services even exist, but once one starts looking for such “hidden transit,” it begins to appear across the country, in urban, suburban, and rural locations. And it is helping people get access to jobs, personal services, and shopping.

Universities have long offered transit service designed to meet the needs of students living on and off campus. Other employers are now discovering that transit amenities can help attract and retain employees. What began in many places as an attempt to meet air quality or sustainability goals has become, over the past decade, more a matter of accommodating the changing preferences of young Americans and attracting aging baby boomers as their desire and ability to drive decline.

Silicon Valet

Microsoft introduced its free bus service to meet
state-mandated goals to reduce single-occupancy auto
commutes—and to accommodate growth at its
suburban campus.

One type of employer-provided transit that has attracted attention is provided by the high-tech giants of the Puget Sound region and Silicon Valley. Most of the news coverage has depicted how the suburban employment centers founded by the early techno-geeks are adapting to the second-generation techies, whose preference for urban living puts them far away from the corporate campuses. The real story is more complicated and, from a real estate perspective, even more interesting.

For Microsoft, what started as an extensive commute program that helps support its ability to grow the campus has evolved into an important part of the firm’s corporate culture.

Washington state law has encouraged employers to provide incentives to reduce single-occupant-vehicle commuting since 1991. In 2006, amendments to the law required local governments in congested areas to set goals and targeted workplaces with more than 100 full-time employees. Employers develop and manage their own programs designed to reach local and state goals.

In an interview earlier this year, Lynn Frosch, Puget Sound transportation services manager with Microsoft real estate and facilities, reviewed the options for commuting to Microsoft’s main campus in Redmond, a suburb of Seattle. The Microsoft campus has 10 million square feet (930,000 sq m) of office space in 79 buildings across 468 acres (189 ha). The campus provides office space for about 50,000 full-time employees and vendors. To reduce the single-occupancy commute trips to 60 percent, Microsoft, which does not charge employees or vendors for parking, offers free transit passes and incentives for carpooling, vanpooling, and bicycling. The intracampus shuttle stops at the nearby Overlake Transit Center, owned by Sound Transit, a local public transit agency. Despite all these incentives, by the mid-2000s the campus’ driving-alone rate was stuck at 66 percent of workers.

Microsoft needed “a next big thing” to hit the 60 percent target, Frosch said, and to accommodate the additional workers who would come with the company’s plans to expand the campus. In 2007, Microsoft launched the Connector, a free commuter bus service for full-time employees. What started as a pilot program with five routes quickly grew into a system with 22 routes offering 218 trips a day. The Redmond campus hit its 60 percent driving-alone target in 2008, as transit ridership grew to 16 percent, an astonishing commute-mode split for a suburban campus. The Connector got people out of their cars: 65 percent of its riders previously drove to work alone.

The Connector prioritizes comfort, reliability, and efficiency. Riders make reservations, which guarantees them a seat and, for some Seattle routes, a spot on the bicycle rack. The coach buses have Wi-Fi; some have overhead racks, cup holders, and on-board power. At the Overlake Transit Center, real-time departure information is displayed as a countdown to arrival of the next bus, and the company is working on a Windows phone app. Reliability is key for customer service: “If I have a bus that can’t make it back in time for a second run, I deploy a second bus,” says Frosch.

To plan routes and stops, Frosch’s team looks at employee density data and assumes the service draws riders from a 1.5-mile (2.4 km) radius for the walk-up stops in Seattle and a three-mile (4.8 km) radius for the park-and-ride lots in suburban locations. The team worked with the city of Seattle to allow buses to pick up passengers in the passenger loading zones already designated on downtown streets; they do not use the public transit bus stops. Outside Seattle, Microsoft leases parking space from churches and retail sites to create park-and-ride lots.

The growth in the Connector reflects its popularity among Microsoft employees. Frosch reports that because of Washington’s commute-reduction law, workers throughout the region expect employers to provide commuter services. Microsoft employees also see the Connector as part of Microsoft’s and their own commitment to environmental sustainability. Frequent users commend the Connector for helping them be productive while supporting a healthy work/life balance.

The commute is now a time of transition, allowing workers to ramp up for the day ahead or to finish e-mails before decompressing for the evening. Some riders even report being able to get rid of an automobile and become a one-car household. Use continues to grow: when the Washington State Department of Transportation instituted tolls in January on State Route 520, the main route between Redmond and Seattle, ridership on the Connector jumped.

Microsoft considers the Connector an employee recruiting and retention tool. Frosch works closely with the company’s human resources department when courting employee candidates, and some confirm access to Connector routes when they are shopping for a new home.

When asked whether she has seen evidence that the Connector routes are affecting housing values near stops, Frosch said it is not something that Microsoft tracks, though she noted that home for-rent and for-sale ads posted in office kitchenettes often mention Connector stops. Real estate salespeople are tracking the technology industry’s “shuttle effect” on housing values. In the San Francisco Bay area, real estate agents interviewed by the Wall Street Journal estimated that nearby shuttle stops may be creating as much as a 20 percent premium in home values.

More important for Microsoft, however, is what getting its driving-alone rate down to 60 percent has meant for preserving the Redmond campus’s viability and potential for growth. “It would be gridlock if those 40 percent tried to come onto campus with their cars,” Frosch said.

Competing for Seniors

GVF, a nonprofit transportation management
association in King of Prussia, Pennsylvania,
manages shuttle contracts for government
and corporate partners.

The growing demands of an aging population—and the competitive edge afforded by offering mobility services—are shaping transit service at Willow Valley Retirement Communities in Pennsylvania. Located outside Lancaster (population 60,000) and 70 miles (113 km) from Philadelphia, Willow Valley is a not-for-profit continuing-care retirement community with 1,513 independent living units, 253 personal-care accommodations, and 269 nursing-care beds on 225 acres (91 ha). Its two campuses surround the Willow Valley Resort and Conference Center. (Many residents discovered the retirement communities while vacationing in the area.) With 75 percent of residents coming from other parts of the country and representing 37 different states, Willow Valley is a national draw.

Transit services have grown with the community over more than 25 years. As the two campuses developed and the community added amenities like a cultural center, an intercampus shuttle became the backbone network, supplemented by additional services. The shuttle makes its runs on weekday mornings and for special events at the cultural center; on-demand service operates during the afternoon. Willow Valley also offers scheduled bus routes into Lancaster and the surrounding county that serve health care providers, shopping centers, and other attractions. Local doctors know which days the Willow Valley buses run and schedule appointments accordingly. The shuttle and bus services are included in the residential contract. For an additional fee, Willow Valley residents can take advantage of taxi-like service and grocery delivery.

The transit service has been constantly fine-tuned and adapted as the community has grown and residents have aged, says John Swanson, president of Willow Valley Retirement Management. The service offers Willow Valley a competitive advantage, he says: “Transit service is becoming more and more important to people as they are looking for a retirement community.”

The importance of transit service was apparent as Maizie Stephenson described living in Willow Valley, where she moved from Virginia more than eight years ago. She calls it “a cruise ship surrounded by cornfields,” but said it is the transit service that allows her to disembark from the cruise and remain active now that she has given up driving a car. She regularly takes the campus shuttle to lunch with friends in other Willow Valley neighborhoods. Lancaster bus routes allow her to see the dentist of her choice instead of depending on the community’s medical facilities. Stephenson’s theory on why the campus shuttle needs to run only in the mornings, while on-demand service suffices later in the day: “We’re napping in the afternoons.”

Help with Management

Availability of transit helps seniors maintain
their independence and is an important
consideration when they evaluate
their housing options.

For employers and property managers not ready to launch their own transit service, help is available from not-for-profit transportation management associations (TMAs). Such associations exist in most major American metropolitan areas and are one form of public/private partnership. They typically are membership organizations in which employers, businesses, and local government pay dues for a range of services focusing on managing the transportation needs of employees, tenants, and customers. Government grants, when available, may support some TMA programs.

In the Greater Philadelphia area, one such association is GVF (the Greater Valley Forge Transportation Management Association), located in King of Prussia. GVF was founded in the early 1990s to help the region meet air quality standards and reduce congestion through provision of alternatives to driving alone. Unusual for these associations, GVF offers its partners (corporations and government agencies) assistance with setting up shuttle services. GVF handles the request for proposals and manages contracts with fleet owners and operators; it is the face of customer service and relieves employers and property managers from dealing with day-to-day ridership issues. Shuttle partners include Montgomery County College, Valley Forge National Park, King of Prussia Mall, and several of the big pharmaceutical corporations in the region.

GVF’s service began as a temporary solution to a regional traffic problem. According to Rob Henry, executive director of GVF, the TMA recognized an opportunity in the 1990s when some large state highway construction projects threatened to snarl the region’s traffic for months at a time. GVF approached the Pennsylvania Department of Transportation with a request that the department support shuttle service, with the private corporations affected by the traffic jams also contributing. But the temporary fix had long-term effects: after the highway projects were completed, some of the private partners kept the shuttles running on their own—primarily providing “last mile” types of service, connecting their offices to the regional rail system.

Many of the companies involved in GVF see the shuttles as a way to meet their environmental sustainability goals, but Henry has noticed a new trend: employers and even entire business districts are using or considering establishing private shuttles as a way to attract talent and keep their real estate competitive. For example, Arkema, a French industrial chemical manufacturer, used GVF-managed shuttles to assist employees when its North American headquarters relocated to King of Prussia from Philadelphia in 2011. The three shuttles reach all the way into New Jersey, and in their first year of operation carried 10,000 riders.

But in King of Prussia, the second-largest regional job center outside of downtown Philadelphia, office buildings have also lost tenants to more transit-rich locations. The car dominates in this area: fewer than 1 percent of workers take transit. Henry and GVF are working with the business improvement district to raise funds for a districtwide shuttle service that would be integrated into the Southeastern Pennsylvania Transportation Authority’s suburban rail stations. With 80 percent of the funding committed, Henry reports that GVF and the business improvement district await word on a federal grant.

Lessons Learned

When employers and property managers get interested in transit service, they do not just replicate the public transit model; they learn, innovate, and adapt as they go forward.

Henry has learned that if employers do not charge for parking, it is difficult for them to charge fares for a shuttle. Employee shuttles appear to work best when the service is presented as an amenity, a model both Microsoft and Willow Valley Management follow.

Frosch emphasizes learning from one’s peers in order to adapt and innovate. Swanson recommends looking outside one’s own industry for innovative ideas. Although the seniors’ housing industry has many sources of advice regarding transportation, his team investigated car rental companies and their airport shuttles for technologies that could be used at Willow Valley.

For guidance, Henry recommends reaching out to the Association for Commuter Transportation, a national association of professionals who specialize in transportation demand management.

Implementing a private transit service can help a company achieve many goals, including minimizing the need for parking, attracting talent, keeping suburban locations competitive, and achieving environmental sustainability targets. But Henry notes one practical reason why some employers turn down the opportunity to cut costs by opening the shuttles to nonemployees: they do not want their employees fraternizing with the competition.

This article is part of the Business on Board series, which explores the shifting role of the private sector in advancing transit. To read other articles in this series, see:

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